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Terry Gou, Foxconn founder and chairman, is
contemplating a run for the presidency of Taiwan. Should he go for it?

Given his wealth – an estimated $7.8 billion – and stature
in Taiwan, some comparisons to US President Donald Trump will be inevitable. There
are distinct differences in upbringing and temperament, however. Gou is a
self-made man, having launched Hon Hai as a components supplier in the early 1970s.
He built the company brick by brick, expanding into new markets as opportunities
arose, and taking advantage of mainland China’s proximity and low cost-model.
When the West started looking for cheaper manufacturing alternatives, he was
ready.

He has generally been media-shy throughout his career. It was only after Foxconn came under scrutiny as workers started jumping off its roofs that NGOs began putting pressure on Apple, Foxconn’s largest customer, and Western media took note. Long articles in The New York Times,Wall Street Journal and Forbes followed.

But is Gou the guy? Whether his domineering approach will be welcome even in Asian cultures today is unclear. In the wake of the Enron collapse, in 2007 the WSJ quoted him as saying, “Even for those of us who lived through Enron, it’s hard not to come away disgusted. I always tell employees: ‘The group’s benefit is more important than your personal benefit.’ ” At the time, a typical mid-level assembly-line worker in Taiwan earned about $230 a month, including overtime pay, while Gou was a multibillionaire.

Neither is the inherent conflict-of-interest with China,
where Foxconn has the majority of its manufacturing capacity and business
interests and employs hundreds of thousands of residents. Taiwan’s self-styled independence
stature could be in question were Gou come to office. How would he priorities decisions
that could mean risking his financial standing?

Citing divine inspiration, Gou told media that he
seeks “peace, stability, economy and future.” Those are worthy goals. Given his
track record as an employer and his financial dependence on China, how he will achieve
them deserves scrutiny.

But the crux of it is a tale of global politics and business tactics growing ever-more-fascinating by the day.

In short, at the Consumer Electronics Show this week, the head of Huawei’s consumer business group issued a statement saying the smartphone maker doesn’t think much of the incoming Trump administration’s habit of calling out companies that build and import product to the US.

While Trump has thus far had mostly automakers in his sights (GM, Toyota, Ford), Apple has been the poster child for the war of words over trade. By speaking out at CES, the world’s largest technology trade show, Huawei is among the first companies, and likely the biggest, to go on the offensive.

Until the new administration is officially installed in two weeks, the machinations are mostly bluster. But the chatter shows no signs of abating, and the campaigns for — and now, against — Made in America are just starting to heat up.

In fact, companies like Jabil has no reason to shift gears. Foxconn’s history is to make grand statements (or have the press make them for it) of billion-dollar investments, then do nothing. When it comes to investments, I will repeat past assertions to look at the gap between what Foxconn says and what it does.

All the countries mentioned in previous breathless anticipation — India, Vietnam, Brazil, Indonesia, the US(!) — are still waiting for the investments to materialize. My belief is that Foxconn makes these statements in order to take the wind of the bad press sails, then once the air is settled, it continues to expand where it always has — in China.

It costs perhaps $20 million to $30 million to bring a mid to large size greenfield plant online, depending on land costs, of course. Indeed, the rumored $7 billion investment in the US would be greater than the aggregate electronics assembly investment in the WORLD over the past 5+ years.

(Keep in mind Foxconn is not a semiconductor fabricator; if it were, $7 billion wouldn’t be out of the range of normal.)

Finally, understand that Foxconn founder and chairman Terry Gou has been tied to higher office in his native Taiwan, perhaps even running for president in that nation’s 2020 elections. That this is being touted in the national-party-leaning China Post suggests the Chinese government approves.

When I heard early this month that Foxconn (Hon Hai) chief Terry Gou offered to train Americans in electronic manufacturing I recalled one of Apple’s excuses for putting its production in Asia, much of which went to Foxconn which now has over a million workers. Apple stated that America just did not have a sufficient number of qualified and trained technicians and engineers (tens of thousands Apple said) available to build its products here.

Then I thought, why would Gou make this offer? He certainly has not shown himself to be a good Samaritan in the past. The only conclusion I could reach was that he was planning to establish assembly operations in the US and would need a qualified work force to achieve this. Note that production of iPad minis are behind schedule and market demand. Labor costs have risen rapidly and continually in the PRC over the past five years. Hon Hai has been plagued with labor problems and a high factory worker suicide rate in China during the past few years. Gou reportedly is reported to be conducting evaluations in cities such as Detroit and Los Angeles where there is a large available labor pool. It should be noted that Foxconn has debunked the stories associated with the possible establishment of a US manufacturing base. But then, is it possible that Mr. Gou has become a good Samaritan when it comes to helping the US’s manufacturing capabilities?

Meanwhile, Gou, at a recent public event, noted that the company is planning a training program for US-based engineers, bringing them to Taiwan or China to gain first hand experience in the processes of learning product design and manufacturing. He has already been in touch with MIT regarding the program. They will also be in an environment to learn Chinese.

All this begs the question: Where are the American companies, government agencies, and elected officials that claim that they want to bring manufacturing jobs back to the US? Where is the commitment? Where is the investment? What steps are being taken to entice American manufacturers to the table? What motivation is being offered? If a foreign company can find it attractive to do so, why can’t an American company find it so, too? Even more interesting is the question, “What is the U.S. government doing to keep its current manufacturing base viable and growing?”

Is Japan’s interconnect future on shaky ground? Third-quarter results from Taiwan’s leading board makers (suppliers to Apple, automotive companies, and tablet makers) indicate that the center of HDI manufacturing has already undergone a major shift from Japan toward Taiwan and China. Taiwan’s government has been extremely supportive of this and other high-tech activities and investment by its “native” electronic (and other) companies.

If Warren Buffett really believes in BYD’s electric car technology, then why doesn’t he drive a BYD car instead of an American car? Doesn’t that tell you something about what he really thinks of BYD?

It should be noted that Buffett spent $26.5 billion last year to acquire the second-largest US railroad. By Gou’s twisted logic, Buffett shouldn’t be driving at all — he should be taking a train everywhere. But then again, Gou didn’t get so rich by being a generous soul.

Under different circumstances, would Foxconn’s Terry Gou be considered the second coming of Henry Ford?

This Business Week article suggests so. I’ll have to study my Henry Ford history, because while the piece breaks little new ground, it is filled with Gou quotes that are ironically delicious: “Work itself is a type of joy”; “A harsh environment is a good thing”; “Hungry people have especially clear minds”; “An army of one thousand is easy to get, one general is tough to find.”

All this from a man worth an estimated $5.9 billion. It doesn’t sound like the man who said of the Model T, “”When I’m through, everybody will be able to afford one, and about everybody will have one.”

Also, the new Madison Avenue p.r. agency’s touch is coming through, as Business Week reports on how Guo’s family fled the China and the Mao-led Communists in the late 1940s. There also is background fodder on his personal family tragedies — his wife and son both died of cancer in the same year — and how he practices yoga and regularly takes his 85-year-old mother for Taiwanese noodles.

The article attempts to smooth over criticism of the employee suicides (calling it a classic cluster, despite evidence by the Wall Street Journal to the contrary), and completely misses the boat on how overtime works in China, finding several workers who say they welcome the extra hours, without bothering to acknowledge the reason they work OT is because they need the money.

The gold nuggets come when Gou intimates his strategy to move workers off the company rolls and onto the government’s. “I think we need to change the way things are. Businesses should be focused on business and social responsibility should be government responsibility.” Comparisons of Foxconn to Wal-Mart sound more apt than ever before.

I don’t expect a smear job. However, this piece has the fingerprints of a PR agency at its finest all over it. Read it with that in mind.

While no suicides have been reported — unlike the dozen at Foxconn’s Shenzhen plant this year alone — the accusations, by the very official-sounding National Labor Committee, a US-based NGO, are damning.

In a less-than-stellar initial response, Jabil took issue with the report’s summary, saying , “A quick look over this lengthy summary, written by a ‘respected Chinese worker rights activist and scholar, who must remain anonymous,’ paints a very accusatory but not very accurate picture.” Jabil’s response is too cute by half: the full report was authored by NLC director Charles Kernaghan, based on undercover investigations in China. Only the three-paragraph preface, per the report, is credited to the anonymous Chinese scholar.

Regardless of whether the charges are warranted, Jabil will certainly have to answer for itself. For the workers’ sake, let’s hope they are exaggerated. But if they aren’t, Jabil faces the same disdain the world holds for the likes of Terry Guo — and deservedly so.

Against all odds, the situation has worsened as bloggers have uncovered a video purported to show Foxconn security guards beating an employee. (Is this the Shenzhen citadel, or Abu Ghraib?)

Terry Gou, Hon Hai’s founder and chairman, today insisted to the Wall Street Journal that his company is “not a sweatshop,” and that several measures are being taken to get to the root of the deaths. Among the responses:

Credit the Wall Street Journal for determination. The paper finally landed — after five years of trying — an interview with Hon Hai chairman Terry Gou. The piece (click here for the link) takes readers inside the Foxconn fortress (aka its Shenzhen plant, a one-square mile walled city which employs 270,000 workers).

Even for those of us who lived through Enron, it’s hard not to come away disgusted. ” ‘I always tell employees: The group’s benefit is more important than your personal benefit,’ ” the Journal quotes Gou as saying.